Juniper IPO skyrockets on market debut

The closely watched IPO nearly triples following a initial public offering that priced above the high-end of its range.

3 January 200211:43 am AEDT

Internet equipment firm Juniper Networks jumped nearly 200 percent in its first day of trading following a closely watched initial public offering.

Shares nearly tripled at the open, jumping as high as $106 per share. At the close of trading today, Juniper stock gained 64.875 to 98.875 on 7.5 million shares.

Juniper had raised the price range for its offering to $28 to $30 in advance of the issue. The stock was eventually priced above the expected range at $34 per share--an indication of strong demand for the IPO.

Juniper makes routing equipment that speeds information on the Internet to its destination. The firm has crafted a line of devices that are faster than products from Cisco Systems, the reigning king of data networking and long regarded as the de facto standard for Internet routing technology.

The market for devices that can carry information at gigabit and terabit speeds is expected to reach more than $1.4 billion by 2003, according to market researcher International Data Corporation.

Cisco has long held a dominant position, claiming roughly 70 percent of total routing devices sold on the market. But a new generation of start-ups such as Juniper may offer serious competition for Cisco in a segment most industry observers thought the networking giant had sealed for itself.

The executive and engineering talent at Juniper is partially culled from
Cisco's ranks, including chief executive Scott Kreins, the former chief of
Stratacom--a company acquired by Cisco.

In the past, Kreins has said that if the company's technology was proven successful, there would be plenty of room for Juniper to co-exist with Cisco, given the slew of communications companies that are upgrading their networks to such Internet protocol (IP)-based routing devices.

Cisco may find competition from other new entrants as well. Start-ups such as Avici Systems and Nexabit Networks, among others, are in the midst of trials of their own high-speed routing devices, which stretch the networking speed limits even further than do Juniper's products.

Nexabit, long rumored to be a possible acquisition target of Lucent Technologies, was bought by the networking giant today in a stock deal valued at $900 million.

That deal buttresses the notion that the high-end routing market could be a hot one for start-ups, since Nexabit has yet to report any revenue, though it is in technology trials with several communications carriers.

In another move, Avici executives said they have severed marketing and distribution ties with Nortel Networks in what could be a pre-cursor to its own plans to go public.

Nortel will retain its 20 percent stake in Avici, but will not have a seat on the company's board anymore, according to Avici executives. Avici chief executive Surya Panditi said his firm had become too closely associated with Nortel.

"We wanted the flexibility of working with a whole range of customers,"
Panditi said.

Nortel recently introduced new technology from its Bay Networks acquisition called the Verselar 25000. Following the release, Avici's Panditi said it became clear that Nortel could satisfy their own high-end routing needs internally. Nortel has been showcasing Avici's technology--currently in tests--as the Verselar 45000.

In addition, reports out of Silicon Valley indicate that Cisco may be close to launching a speed upgrade to its own high-end routing device, the 12000 series. The new model, rumored to be dubbed the 12000 Plus, may close the speed gap between Cisco and the bevy of start-ups angling for a piece of the high-end Internet routing pie.

A Cisco spokeswoman refused to confirm the existence of such a device. "We don't talk about unannounced products," she said.